Brightcove Inc.

Greetings. Welcome to Brightcove's third quarter 2021 earnings call. At this time, all participants are in a listed only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Brian Venue from ICR. Thank you. You may begin.

Good afternoon and welcome to Brightcove's third quarter 2021 earnings call. Today we will discuss the results announced in our press release issued after market close. With me on the call are Jeff Ray, Brightcove's chief executive officer, and Rob Norick, Brightcove's chief financial officer. During the call, we will make statements related to our business that may be considered forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. including statements concerning our financial guidance for the fourth fiscal quarter of 2021 and the full year of 2021, expected profitability and positive free cash flow, our position to execute on our go-to-market and growth strategy, our ability to expand our leadership position, our ability to maintain and upsell existing customers, as well as our ability to acquire new customers. Forward-looking statements may often be identified with words such as we expect, we anticipate, upcoming, or similar indications of future expectations. These statements reflect our views only as of today and should not be reflected upon as representing our views of any subsequent date. These statements are subject to a variety of risks and uncertainties that cause actual results to differ materially from expectations, including the effect of the COVID-19 pandemic on our business operations, as well as an impact on general economic and financial market conditions. For discussion of the material risks and other important factors that could affect our actual results, Please refer to those contained in our most recent annual report on Form 10-K and as updated by our other SEC filings. Also, during the course of today's call, we will refer to certain non-GAAP financial measures. There is a reconciliation schedule showing GAAP versus non-GAAP results currently available in our press release issued after market closed today. It can be found on our website at www.brightcove.com. In terms of the agenda for today's call, Jeff will provide a summary review of our financial results, an update on our operations, and a review of our strategy. Rob will finish with additional details regarding our third quarter 2021 results as well as our outlook for the fourth quarter and full year 2021. With that, let me turn the call over to Jeff.

Thanks, Brian, and thank you everyone for joining today. I hope you and your families are well. We had a very productive third quarter. We prepared for and executed our annual virtual user conference, Play 2021, made multiple innovation announcements, and continued to execute on our retention strategies. We also signed an agreement to acquire technology that will enhance video interactivity. Play 2021 was a resounding success as our largest user event to date, with almost 6,000 registrants from 100 countries. In a testament to the power of virtual events, we grew the event by nearly three times that of Play 2020, attracting new companies to witness the power of Brightco, with half of the registrations being new to our community. During our primary promotion time in the six weeks leading up to play, we saw a 4,000% increase in viewing volume of Brightco videos, driving massive growth in awareness and new contacts for Brightco. Over two days, we served up 60-plus sessions, 35 of them by customers and partners, including AMC Network, Akamai, South by Southwest, Academy of Motion Picture Arts and Sciences, HubSpot, New South Wales Department of Education, Tennis Australia, the LPGA, Reverie, and the Metropolitan Opera. We're thankful to all of our customer speakers for sharing their success stories. If you couldn't attend Play Live, you can tune in to Brightcove Play TV, our very own corporate TV channel, to view all the content. So with that, let's start with an overview of our results. For the third quarter, revenue was $52.2 million, up 6.3% year-over-year, and above the high end of our guidance of $51.5 million. Adjusted EBITDA was $4.2 million, ahead of the high end of our guidance. While we had a solid performance relative to our guidance, our sales performance in the quarter was below expectations. In particular, our Asia-Pacific and Japan regions underperformed, and we saw lower than anticipated levels of upselling activity across our customer base. As a result, we're adjusting our full-year revenue guidance, which Rob will provide more detail on later. We've made several changes to address the challenges from the quarter, including making sales leadership changes in Asia-Pacific, and doubling down on the positive sales execution and enablement strategies, such as value selling methodology, standardized proposal formats, and deal coaching that have proven successful in driving significant bookings growth in North America over a two-year period. We're moving quickly to implement the proven and successful sales tactics from North America, not just in Asia Pacific, but globally. It will take several quarters for these changes to impact our results fully. Additionally, we continue to work on our renewals business and make good progress in the quarter. We remain confident our product and go-to-market strategy will generate the revenue growth we know this business can deliver. I would like to spend a few minutes highlighting the significant progress in our strategic focus areas, innovation, customer success and retention, and go-to-market. Let me give you some detail on each of these areas. First, innovation. We have heavily invested in R&D, and it is paying off with innovative products coming to market. This quarter, we had multiple product announcements that add considerable value to our customers and help them better engage with their audiences, monetize their content, and sell their products and services. Let's start with Brightcove Marketing Studio, a new video communication solution that allows marketers to drive more significant results from their digital campaign using video across all communication mediums. Typically, marketing professionals search multiple systems to find ideal videos for their initiatives, often lacking insight into which videos perform best or which valuable assets exist. RightCode Marketing Studio provides role-based access to video assets through a team's preferred social platforms, marketing automation, digital asset management, and content management tools. Brightcove Marketing Studio will be available early next year, and current Video Marketing Suite customers can automatically be upgraded to Marketing Studio. We also announced Brightcove Corp. TV, a solution designed for companies to serve content to their audiences in a more compelling and engaging format. Brightcove Corp TV enables organizations to create channels similar to Netflix or Hulu that stream content to customers and employees, each with their own audience-specific branded content. This dynamic, engaging solution empowers companies using video to forge stronger connections with their customers, partners, and employees. We're proud to be serving NetApp, a global cloud-led, data-centric software company, with this solution. NetApp launched its Corp TV channel, NetApp TV, at its Insights virtual conference on October 22nd. James Whitemore, EVP and CMO of NetApp, said, quote, there's no denying the ever-increasing popularity of streaming content to entertain, educate, and influence audiences, even in a B2B world. It's why we recently launched NetApp TV. a new always-on video channel powered by Brightco. With NetApp TV, we're providing customers, partners, and employees with a rich, seamless experience when accessing the content they want, when and where and how they want, 365 days of the year. We keep them thinking of NetApp all year. Brightco Corp TV has enabled us to maximize the return on our content creation costs while serving our audiences through a highly engaging channel, end quote. Another exciting announcement highlights our open platform, extensive technology integrations, and use of APIs. The Brightcove Marketplace enables Brightcove customers to add powerful functionality to their video solutions directly from the Brightcove platform without the need to go to other third-party sites. We launched the Brightcove Marketplace with over 40 technology solutions and this ecosystem will continue to grow. And last, we recently announced our intent to acquire a significant portion of the assets of HapYak, including its existing global customer base, commercial interactive video technology, IP, brand, and marketing assets. HapYak is a leader in the video interactivity market and was a longtime partner of Brightco. With the integration of the HapYak technology, Brightcove customers can quickly and easily incorporate interactivity into any video. Our team has successfully sold Hapyak for years, and it's a natural fit to bring the technology into our portfolio. We expect this deal to close before the end of the year. We also continue to focus on bringing added value specifically to our media customers, evidenced by our enhancements to rights management, ad insertion performance, and low latency for live streaming. all also released last quarter. For retention, let's move on to these efforts. Retention has always been a critical focus for us, as you know, and I'm delighted that we are making excellent progress in improving the customer experience. Some highlights from the past quarter include Brightcove continues to have an award-winning 24-7 in-house support team. This month, the TSIA recognized the team for support staff excellence for the eighth consecutive year. Our support has long been and continues to be a true differentiator for Brightco. Our revamped onboarding program includes free and paid onboarding options, ensuring that all customers have a successful launch on Brightco. And we recently implemented our roadmap initiative to engage with our customers regularly and solicit their feedback on our product roadmap, and the latest customer requests. We're pleased with our improvements to drive customer attention towards best-in-class levels for a SaaS company. We still have more work to do, but we're clearly on the right path. An example of our retention progress is 7Network, a media customer we've had a close strategic relationship with since 2015. During the recent renewal, we were at risk of losing 7 for a do-it-yourself and competitive solution. Throughout the renewal process, we demonstrated the value of the Brightcove platform and instilled confidence in ongoing innovation, technology improvements, and Brightcove support. We retained and grew our VOD business with Seven as it signed a new agreement. Turning to our go-to-market highlights, we're proud that customers worldwide select Brightcove as their video provider of choice for our reputation in reliability, scalability, security, innovation, and the return on investment we can deliver to them. Let's look at a few examples from this past quarter that demonstrate how we are helping customers succeed with video. Football Co. is a new Brightcove customer, serving a global audience of 400 million people across their digital destinations and syndication partners. The organizational will use Brightcove to power video-on-demand soccer content on its owned and operated websites, including Goal.com, one of the world's most popular digital football destinations, and its syndication partners. Football Co. will increase its flexibility by leveraging Brightco's unrivaled ability to allow content creators to distribute and monetize content at scale on a global level. Mars is a new customer that selected Brightco as its video platform to host manage, and deliver Mars video content to its external consumer-facing properties globally and its internal audience over 133,000 employees across six continents. BrightCode will be used by Mars associates, agency partners, and content managers to organize, approve, and manage Mars-owned content with support from multiple languages, regions, and formats. Mars came to Brightcove for our unrivaled security when its previous vendor couldn't meet Mars' demanding security requirements. A longtime Brightcove customer, ITV, is a broadcaster that creates, owns, and distributes high-quality content on multiple platforms globally. Brightcove powers ITV's short-form websites and apps for shows, including Good Morning Britain, Love Island, news, and sports content. ITV renewed and grew its contract with Brightcove to continue to deliver flawless video to its millions of viewers. GameStop is a video game, consumer electronics, and gaming merchandise retailer and longtime Brightcove customer. The organization uses Brightcove video across its primary web properties and recently renewed its engagement with us. GameStop continues to use Brightcove to engage with its customers and deliver a seamless video experience across its digital properties. In the third quarter, we added 16 partners globally. We continue to add partners in the events and production space, including Lenos, Bizaboo, Brand Live, Ovation, and Encore. We also added new partners in India, Latin America, and EMEA to expand our geographical reach. These partners add value for our customers using Brightcove's world-class streaming technology. Our referral partner program and master license program allow Brightcove to fit into our partners' business models, enabling us to expand our reach through our partners' existing customer bases. Several of these partners shifted from competing platforms to the Brightcove platform this past quarter, not only due to our superior technology and global reach, but because we recognize the importance of a highly responsive support team. Deborah Chong, Leno's software CEO, said, quote, a video player and streaming service can make or break an event. We integrated BrightCode's broadcast quality video capabilities into our hybrid event marketing platform to guarantee our clients reliability, high fidelity, and a scalable video solution. Leno's customers can now power up branded event engagement for employees, customers, partners, and prospects, seamlessly incorporating video to engage, inspire, and deliver sales-ready lead generation enterprise-wide, end quote. We know video drives business, and we know our customers benefit from deploying BrightCode Video. To better help our sales organization show BrightCode's total economic benefits, we commissioned Forrester Consulting to conduct two total economic impact, or TEI, studies, one focused on media organizations and the other on enterprise companies. For the enterprise study, the decision-maker interviews and financial analysis found that a composite enterprise organization using Brightcove technology experiences an ROI of 225% over three years. The interviewed decision makers shared that in their organization's legacy state, they had limited visibility and control over their video content. Organizations struggled to syndicate video for consumption on multiple platforms in a timely manner, and it took several weeks to process the content, and they could not transcode fast enough. These decision makers now use BrightCode as an asset in their customer journey to drive increased sales and additional revenue. Turning to the media study, the composite media organization using Brightcove technology experiences an ROI of 226% over three years. Interviewees shared that their organizations expanded their delivery to new markets and new devices using Brightcove. Brightcove allowed these organizations to quickly dub content to reach expanded geographies, offering their services to entirely new audiences. Legacy Solutions did not provide an easy path to entering new markets. We know we have the best technology, but now our sellers have further evidence to demonstrate this. Before I hand it off to Rob to cover the financials in depth, I want to reiterate that we made progress this quarter, even though we are not satisfied with the sales execution challenges we experienced. We hosted our best play ever, ramped up innovation with the announcement of multiple new products, increased our retention rates, and signed many new partners worldwide. We continue to make progress on our key focus areas and are quickly addressing the areas that need additional improvement. I'm confident in the team we have in place and our strategy and that we will achieve our long-term financial goals. I'd also like to take a moment to address the other news we released today relating to my eventual retirement from Brightcove. I came out of retirement to join Brightcove in 2018 to facilitate the transformation of Brightcove and to put the right team in place to lead the company to the next chapter in its growth. While we are not fully satisfied with our current results and we know we have more work to do, I have every confidence in our strategy and the great team we have built. My plan, as announced today, is to retire from Brightco. I will serve as CEO until a successor is on board and thereafter will remain in an advisory capacity with the company until the end of 2022. This approach ensures that our board will have enough time to find the right leader to continue and build upon this company's amazing opportunity. This approach gives the company the ability to continue to focus on execution and and deliver the expected results to our shareholders, while also having the time to find the ideal next CEO for Brightco. The board has retained an executive search firm and has launched the search process for the new CEO. With that, let me turn the call over to Rob to walk you through the numbers. Rob?